Cardi Corp. v. State
| Decision Date | 30 July 2014 |
| Docket Number | C.A. No. PB 08-7787 |
| Court | Rhode Island Superior Court |
| Parties | CARDI CORPORATION, Plaintiff, v. STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS, DEPARTMENT OF ADMINISTRATION, DIVISION OF PURCHASES and THE HANOVER INSURANCE GROUP, INC., Defendants. |
SILVERSTEIN, J. Cardi Corporation (Cardi) brings this suit against The Hanover Insurance Group, Inc. (Hanover), among others, for declaratory judgment and breach of contract. Currently before the Court is Hanover's Motion for Summary Judgment (Motion) pursuant to Super. R. Civ. P. 56 as to both counts. Cardi opposes Hanover's Motion as to both counts.
The instant case revolves around a highway construction project which included the construction of the Providence River Bridge (the Project), a new 900 foot bridge over the Providence River. In the contract (the Contract) between the Rhode Island Department of Transportation (RIDOT) and Cardi, Cardi was the Prime Contractor for the Project. Cardi later entered into a subcontract agreement (the Subcontract) with National Eastern Company (NEC) to supply structural steel beams and other steel materials required for construction of the bridge. The Subcontract required NEC to perform its work in accordance with the requirements andspecifications of the Contract. NEC agreed to indemnify Cardi for all losses incurred by Cardi on account of NEC's work.
In furtherance of the Subcontract, Cardi required that NEC obtain a payment bond and a performance bond covering the work. Hanover issued Performance Bond #1735673 and Payment Bond #1735672 (the Bonds). Under the terms of the Bonds, Hanover bound itself to Cardi and agreed to pay Cardi, up to the value of the Bonds, for any damages suffered by Cardi as a result of any payment or performance failure on the part of NEC.
The Bonds are standard American Institute of Architects (AIA) A312 bonds1. The Bonds name NEC as the contractor, Cardi as the owner, and Hanover as the surety. The performance bond provides that the surety's obligation under the bond shall arise after:
Under the requirements of the Contract, NEC was to coat the steel with a specific thickness of zinc coating in order to protect the steel from corrosion. RIDOT engaged a quality assurance consultant to inspect each piece of steel at NEC's facility before it was permitted to leave. NEC coated the steel with zinc, and thereafter, the steel was delivered and installed.RIDOT paid Cardi for the steel and the zinc coating, which amounted to $779,400. Cardi then paid NEC for NEC's application of the zinc coating, which equaled a sum of $649,500. About one year later, in May 2006, RIDOT raised questions as to whether the zinc coating had been properly applied to the steel. RIDOT engaged a consultant to examine the sufficiency of the coating. That consultant found that the coating on approximately fifty percent of the steel was not in accordance with the specifications as set forth in the Contract.
In early 2008, RIDOT provided its consultant's report to Cardi. Thereafter, RIDOT deducted the $779,400 it previously paid Cardi from other monies due to Cardi on the Project along with the expenses for the inspector—which equaled $38,100—for a total sum of $817,500. Cardi immediately provided the consultant's report to NEC.
On December 11, 2008, Cardi filed its original Complaint against Hanover (Complaint). On April 10, 2012, Hanover filed its Motion on grounds that Cardi's claim was barred by the two-year statute of limitations as contained in the Bonds. Hanover claimed that NEC completed performance on the Project in August 2006 and thus, when the suit was brought in December 2008, it was outside the two-year period that Cardi had to bring its claim. As a response, Cardi provided the Court with evidence that demonstrated that NEC performed work past August 2006. See Aff. of Paul J. Grimaldi ¶¶ 2-5 (Grimaldi Aff.). Hanover withdrew its Motion in order to conduct additional discovery. After conducting such discovery, Hanover renewed its Motion.
In December 2006, questions were raised as to NEC's original work on certain access hatches, specifically whether the access hatches were strong enough to hold the weight of people standing on them. See Grimaldi Aff. ¶ 2. NEC inspected the access hatches and proposed a retrofit that would reinforce the existing mesh with steel reinforcement clips. Grimaldi Aff. ¶¶ 2-3 & Ex. A. NEC had previously worked on the access hatches pursuant to the approved shopdrawings. See id. Therefore, NEC characterized the reinforcement work as "extra work" that "would be done at no additional cost to the State of Rhode Island." Id. at Ex. A. In January 2007, NEC submitted its proposal and sent it to Cardi, who then sent it to RIDOT for approval. Id. at ¶ 3 & Ex. A. The work was completed after RIDOT approved NEC's proposal. However, NEC's proposed and approved work was not the work that was performed. Photographs show that the mesh was welded to the steel rather than attached using the reinforcement clips proposed by NEC. See Grimaldi Dep. 91:2-5, Sept. 11, 2013. It is disputed if NEC conducted the work on the access hatches.
Hanover raises three main issues in its present Motion: (1) whether Cardi's claim is barred by the two-year limitations period; (2) whether Cardi qualifies as a "Claimant" under the Bonds; and (3) whether Cardi satisfied the conditions precedent to seeking recovery outlined in the Bonds.
"Summary judgment is a proceeding in which the proponent must demonstrate by affidavits, depositions, pleadings and other documentary matter . . . that he or she is entitled to judgment as a matter of law and that there are no genuine issues of material fact." Palmisciano v. Burrillville Racing Ass'n, 603 A.2d 317, 320 (R.I. 1992) (citing Steinberg v. State, 427 A.2d 338 (R.I. 1981)). The court, during a summary judgment proceeding "does not pass upon the weight or the credibility of the evidence but must consider the affidavits and other pleadings in a light most favorable to the party opposing the motion." Id. (citing Lennon v. MacGregor, 423 A.2d 820 (R.I. 1980)). Moreover, "the justice's only function is to determine whether there are any issues involving material facts." Steinberg, 427 A.2d at 340. The court's purpose during thesummary judgment procedure is issue finding, not issue determination. O'Connor v. McKanna, 116 R.I. 627, 359 A.2d 350 (1976). Therefore, the only task for the judge in ruling on a summary judgment motion is to determine whether there is a genuine issue concerning any material fact. Id.
"When an examination of pleadings, affidavits, admissions, answers to interrogatories and other similar matters, viewed in a light most favorable to the party opposing the motion, reveals no such issue, the suit is ripe for summary judgment." Indus. Nat'l Bank v. Peloso, 121 R.I. 305, 307-08, 397 A.2d 1312, 1313 (1979). Bourg v. Bristol Boat Co., 705 A.2d 969, 971 (R.I. 1998). However, it is not an absolute requirement that the nonmoving party file an affidavit in opposition to the motion. Steinberg, 427 A.2d at 338. If the affidavit of the moving party does not establish the absence of a material factual issue, the trial justice should deny the motion despite the failure of the nonmoving party to file a counter-affidavit.
This action centers on a standard AIA A312 Performance Bond. Hanover first argues that Cardi has not demonstrated any issues of material fact that would prevent summary judgment from entering in regard to its Complaint being barred by the two-year limitations period described within the performance bond. Our General Laws provide that no action onperformance bonds shall be commenced after the expiration of two years "after the day on which the last of the labor was furnished or performed or material or equipment was furnished or supplied by any person claiming under the section." See G.L. 1956 § 37-12-5. Hanover argues that because NEC last furnished work or material on the Subcontract in August 2006, any claim against Hanover or NEC later than August 2008 would be barred. Although Cardi has attempted to present evidence to demonstrate that NEC performed work as late as February 2007, Hanover claims that such evidence does not create a material dispute because: (1) the evidence was recanted, so there is no evidence that NEC performed the work; (2) the alleged work was outside the scope of the bonded contract and cannot restart the limitation period; and (3) the alleged work is merely corrective or repair work and, therefore, is legally insufficient to affect the running of the limitations period.
Hanover relies on Sims Corp. v. The Hartford Accident & Indem. Co., No. 76-2466, 1979 WL 195994, at *1 (R.I. Super. Feb. 22, 1979) (Cochran, J.), a decision that laid out a legal test for determining the last day upon which labor or materials are performed or furnished. The test is whether the work...
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